Multiple Choice
State Road Fabricators Inc. is considering eliminating Model A02777 because of losses over the past quarter. The past three months of information for Model A02777 are summarized below:
Overhead costs are 75% variable and the remaining 25% is depreciation of special equipment for model A02777 that has no resale value.
If Model A02777 is dropped from the product line, operating income will ________.
A) increase by $80,000
B) decrease by $117,500
C) increase by $37,500
D) decrease by $80,000
Correct Answer:
Verified
Correct Answer:
Verified
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